FIXER UPPER TIPS & TRICKS

Most of you know someone or have heard of someone taking part of the game of fixing and "flipping" houses. The most popular people that do this for a living are the "We Buy Ugly Houses" people. Remember the commercials and billboards? "Ug buys ugly houses." They are the extreme fixers and/or flippers.
Not everyone has the capital or know-how to do the advanced deals that they do. It currently costs over $100,000 to start a We Buy Ugly Houses (HomeVestors) franchise. These tips are not for them since they have advanced training to tell them how to complete those purchases. These 10 tips are for the people that are beginners and want to try to take on the challenge of fixing and/or flipping.

1. NEIGHBORHOOD is key. Don't buy an investment property if you don't know the real estate values in the area that you are planning on purchasing in. Just because it looks like a deal doesn't mean that it is.

2. CONDITION. Avoid houses that are in excellent condition. Just the opposite applies as well: don't buy tear down properties, those can get way to expensive.

3. CONDOS/TOWNHOUSES are not the best thing to fix and flip, they usually are all around the same price range in the development and unless you get it super cheap, there won't be any room for improvements.

4. YOU MAKE THE MONEY ON THE BUY. The normal definition of a potentially profitable fixer-upper house is a sound, well-located residence that can be bought for at least 25 percent below recent sales prices of comparable nearby homes in excellent condition. If you can't purchase it that cheap, then move on to another house. You may have to offer on 20 houses before you find the one that makes the most sense.

5. LOCATION, LOCATION, LOCATION. In addition to being a structurally safe house in need of profitable (primarily cosmetic) work, the property should be located in a decent neighborhood (not in a high-crime neighborhood).

6. SCHOOL DISTRICT. Fixer uppers don't have to be in the top school district for the area but make sure to investigate the schools that the potential buyer's kids would go to if they bought your fixer. Just because you don't have kids doesn't mean the buyer won't. They more than likely will.

7. LOW CRIME RATES. No matter how decked out a house is, if it is in a high-crime area the market value will be held down. Don't waste time looking at homes for sale in high-crime neighborhoods. Ask yourself this: Would I want to live in this neighborhood? Get into the mind of your potential buyer.

8. DOLLAR SENSE. Just because you are going to add a new roof to a property doesn't mean you will be making a profit on the sale. Don't do improvements that would be trading dollars for dollars at the end when you could be doing little things that add up fast such as: a fresh coat of paint, new carpet, and decorating.

9. NO BRAINER. Ask yourself when you are about to jump into the huge investment if it is a "no brainer." Is priced way below market value? Does it just need to be cleaned and have minimal repairs? Is the average market time in that area lower than normal?

10. ESTIMATE HIGH. Every little repair can add up fast, decreasing your bottom line. Not to mention all your time. Make sure to figure in a couple thousand extra when you are calculating the price you need to get the house for. You won't want to cut a check at closing, you want a huge check cut to you!